Watch enough car commercials, especially around Super Bowl time, and you’re bound to feel a bit warm and fuzzy about the rebounding automobile industry. Like banking commercials, we see plenty of smiling salesman and happy customers. But let us not forget that, as much as many of us really love our cars, building and selling them is still a business. A business designed to make lots of money.
This is not a nefarious or unsuspecting business model, but we are reminded of it this morning after reading a report from Reuters in which Nissan CEO Carlos Ghosn told reporters that by 2013, Japan’s second largest automaker will soon feature a diverse lineup of cars and trucks that will be 80-percent similar beneath the sheet metal. This represents a doubling of common parts.
“Everything we’re trying to do is about two things: how we make things more in common with partners … and at the same time keep the specificity of each brand,” said Ghosn. “It’s about how we can get the cost efficiency and investment efficiency while at the same time still get a very distinctive brand or product that people will not confuse.”
Nissan will be able to cut costs by as much as 30-percent, and the cars that are produced from this initiative will be available by 2013. While shared parts can make for more efficient assembly lines, there is potential value here for consumers. Though it may not be visible, Nissan products will be less distinct, but by saving on parts and assembly practices, Nissan may be able to increase volume and pass the savings on to consumers. And that’s a win for both the manufacturer and consumers alike.